Page last updated at 06:21 GMT, Wednesday, 5 November 2008

Zardari in talks with Saudi king

By M Ilyas Khan
BBC News, Karachi

President Asif Zardari
The president is facing a balance of payments crisis

The Pakistani President, Asif Ali Zardari, has held talks with Saudi Arabia's King Abdullah during a two-day visit to the country.

Reports say the two leaders discussed recent Saudi initiatives to bring the Afghan government and Taleban leaders to the dialogue table.

Mr Zardari's visit comes at a time when Pakistan needs urgent funds to tide over its trade and budget deficits.

But there are no signs yet of any Saudi cash aid to Pakistan, reports say.

The Saudi king and the Pakistani president also discussed the former's initiative to hold an inter-faith conference to reduce tension between religions and to present Islam as a religion of peace, reports say.

The two sides are expected to sign a number of agreements on cooperation and investment in various sectors.

Mr Zardari is also expected to ask Saudi businessmen to invest in Pakistan's real estate, industry and information-technology sectors.

Reports indicate that the Saudis are considering a special oil facility for Pakistan.

According to the Pakistani foreign office, Mr Zardari will seek Saudi oil shipments against deferred payments of up to two years to reduce pressure on the country's trade imbalance.

There is no indication that Saudi Arabia will provide cash assistance to Pakistan, though some media reports say Pakistan is expecting a $1.86bn bailout package.

Economic, political and military co-operation between the two countries goes back several decades.

Both worked together during the Soviet invasion of Afghanistan and again in the continuing US-led "war on terror".

International obligations

Mr Zardari will seek Saudi support for the forthcoming meeting of a group of countries called the "Friends of Pakistan" (FOP), the foreign office said.

Mosque in Saudi Arabia
Pakistan regards Saudi Arabia as one of its oldest and richest friends

The FOP nations include the US, UK, France, Saudi Arabia, China, the UAE and several other countries. They are meeting in Abu Dhabi on 17 November to devise ways of stabilising Pakistan's economy.

Officials say Pakistan needs more than $5bn within a month to meet its international obligations.

Such upfront cash is unlikely to be furnished in time by any of the FOP nations because of procedural impediments.

Pakistan has been contemplating a short-term loan from the International Monetary Fund (IMF), but says this would be its last resort, given the IMF's stringent conditions.

Pakistani officials believe an oil facility from Saudi Arabia could help the country avoid the IMF loan, or at least put it on a better footing to negotiate for more favourable IMF conditions.

The Saudi leadership is already considering a Pakistani request for deferred oil payments which was made by Pakistani Prime Minister Yousuf Raza Gillani during his visit to Saudi Arabia in July.

President Zardari will also seek an expansion in bilateral trade. The current trade volume between the two countries stands at $5.7bn.

Print Sponsor

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific